The Slow Re-Emergence of Remortgage Deals in the UK

The lack of remortgage deals has been a problem for British consumers over the last few years. However, homeowners were boosted by recent good news from the Council of Mortgage Lenders (CML). The lenders organisation's latest report shows that there has been a significant increase in lending in the UK.

The CML's figures show that lending was rose by 20 per cent from February to March 2011 and now stands at £11.3 billion. Whilst the figures are £200 million below the lending just one year ago, the increase in the number of mortgages being taken is an encouraging trend for the UK's struggling mortgage market.

It has been a tough couple of years for remortgage borrowers. A reduction in the number of lenders and mortgage products available has made it particularly difficult to switch home loan and many homeowners have been frustrated by the lack of remortgage options. Now, though, the rate of mortgage approvals is at its highest level for two years and there are signs the remortgage market may finally be improving.

Over the last decade many households took on personal debt such as unsecured loans and credit cards. And, with rising property prices, many people used a remortgage to raise funds to consolidate high interest unsecured debts.

With fewer remortgages available, increasing numbers of households are struggling to maintain their personal debts. A recent study by the BBC found that personal debt was one of the biggest individual stresses in the UK with the nation owing a collective £1.4 trillion. And, struggling lenders are taking increasingly draconian steps to recover monies from debtors.

In order to reduce the UK's deficit, the government has been forced to cut spending on services and benefits. This means that many households have been forced to take on increased personal debt on credit cards and loans which they are now looking to consolidate with a remortgage.

The CML believe that the housing and mortgage market has improved since March 2010 even considering that household finances are still under pressure from rising inflation and tax increases. Most lenders believe that lending restrictions will continue to be loosened in the second quarter of 2011 and that mortgage finance will gradually become more readily available.

With the Bank of England preparing to increase interest rates, Bob Pannell, chief economist at the CML believes that demand for remortgages will continue to improve. Approvals in February were the highest for two years and Mr. Pannell believes that remortgage lending will continue to shore up the mortgage market in 2011.

The increase in remortgage approvals also suggests that lenders are particularly keen to attract this type of business. Remortgage applications come from borrowers with a track record of maintaining a mortgage commitment, which potentially makes them a safer bet for lenders.

An increase in remortgage approvals also suggests that the UK mortgage market may finally be ready to begin a recovery after several years in the doldrums. The global financial crisis had a profound effect on the remortgage market and there are signs that things may finally be starting to change and that remortgage applicants may finally have something to cheer about.


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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.